Bitcoin Sinks Below $100,000 as Trump’s Tariff Escalation Sparks Market Uncertainty

Bitcoin has tumbled beneath the psychologically pivotal $100,000 threshold for the first time in nearly a week, following U.S. President Donald Trump’s executive order imposing sweeping import tariffs on China, Canada, and Mexico. The dramatic move has already provoked retaliatory measures from the affected nations, igniting broader concerns over the economic and financial landscape, with the cryptocurrency sector sharply divided on the long-term ramifications.

Bitcoin Price Sinks: Trump’s Tariff Offensive and Its Rationale

According to a Feb. 1 statement from the White House, Trump has enacted an additional 25% tariff on imports from Canada and Mexico, while Chinese imports will face a 10% tariff. However, energy resources from Canada will see a comparatively reduced 10% levy.

The administration framed the decision as a defensive maneuver, with the statement asserting: “Trump is taking bold action to hold Mexico, Canada, and China accountable to their promises of halting illegal immigration and stopping poisonous fentanyl and other drugs from flowing into our country.”

While supporters of the policy argue that the tariffs reinforce economic sovereignty and national security, critics warn that they could stoke inflationary pressures. Higher tariffs often translate into increased consumer costs, which could push inflation higher and, in turn, prompt central banks to maintain or even raise interest rates. This scenario has historically triggered a flight from riskier assets like cryptocurrencies into more conventional safe havens such as government bonds and fixed-income securities.

Also read: Three Key Data Points to Analyse Bitcoin’s Market Trends

Global Retaliation Unleashed

Trump’s tariff edict was met with swift and aggressive countermeasures. Canadian Prime Minister Justin Trudeau, in a press conference, announced a 25% retaliatory tariff on $106.5 billion worth of U.S. goods, a move likely to exacerbate trade tensions between the two allied nations.

China, meanwhile, has opted for a diplomatic and legal approach, with its Ministry of Commerce announcing plans to file a formal complaint with the World Trade Organization (WTO) while simultaneously preparing “corresponding countermeasures.”

Mexican President Claudia Sheinbaum, in a pointed response on X (formerly Twitter), declared she had directed the Secretary of Economy to “implement Plan B,” which entails both tariff and non-tariff defensive measures aimed at safeguarding Mexico’s economic interests.

Also read: BTC on Wall Street: The Impact of SEC Rule Changes on Crypto

Bitcoin Takes a Hit Amid Market Jitters

In the wake of these geopolitical tremors, Bitcoin nosedived below $100,000 for the first time since Jan. 27, plunging to $99,111 before recovering slightly to $99,540 at the time of publication, per CoinMarketCap data.

Further underscoring the market’s fragility, analytics from CoinGlass reveal that approximately $22.7 million worth of long positions were liquidated in the four hours leading up to Bitcoin’s price dip. This liquidation spree highlights the precarious positioning of leveraged traders amid mounting uncertainty.

Crypto Community Remains Deeply Divided

Within the crypto sphere, reactions remain starkly polarized. Some industry figures dismiss the notion that Trump’s tariff escalation heralds the end of the bull cycle, while others caution that Bitcoin’s increasing correlation with macroeconomic forces could spell turbulence ahead.

Crypto Capital Venture founder Dan Gambardello derided the prevailing market anxiety, stating, “I cannot believe there’s a popular opinion floating around that Trump’s tariffs and his memecoins ended the bull cycle.” He pointed to institutional accumulation, remarking, “BlackRock is continuing to accumulate ETH and BTC while retail frantically panics because crypto is currently consolidating.”

Conversely, Cinneamhain Ventures partner Adam Cochran offered a sobering counterpoint: “Bitcoin is not separated enough from the global markets and trades like triple-levered tech these days. An economic squeeze of this scale just means pain all around, and we should be ok with denouncing that.”

Bitwise Invest’s head of alpha strategies, Jeff Park, maintained a more optimistic stance, arguing, “How amazing a sustained tariff war is going to be for Bitcoin in the long run.”

Also read: Bitcoin Price Prediction

Conclusion

As global trade tensions mount and economic uncertainty looms, Bitcoin’s trajectory remains an open question. Whether the flagship cryptocurrency weathers this storm or succumbs to broader macroeconomic pressures will depend on how institutional investors, policymakers, and the global financial ecosystem navigate this evolving landscape. One certainty remains: volatility is far from over.

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FAQs

1. Why did Bitcoin drop below $100,000?

Bitcoin’s decline below $100,000 was triggered by President Trump’s new import tariffs on China, Canada, and Mexico, sparking market uncertainty. Investors fear that rising inflationary pressures and potential interest rate hikes could dampen demand for risk assets like Bitcoin.

2. How are global markets reacting to Trump’s tariffs?

In response to Trump’s executive order, Canada has imposed retaliatory tariffs, China is filing a WTO complaint, and Mexico is implementing defensive measures. These trade escalations have increased volatility across financial markets, impacting Bitcoin and other cryptocurrencies.

3. What does this mean for Bitcoin’s long-term outlook?

The crypto community is divided: some believe institutional accumulation will sustain Bitcoin’s long-term growth, while others warn that its increasing correlation with macroeconomic trends could lead to prolonged instability. Future price movements will depend on investor sentiment and global economic policies.